Navigating the waters of the nonprofit accounting world can be complex—especially when you’re balancing the benefits and responsibilities that come with federal funding. One major area that requires technical expertise is the federal single audit. As your nonprofit accepts federal aid, it also requires careful management and compliance with a unique set of requirements. Let’s discuss what you can expect and anticipate in future single audits and how the Assurance Dimensions audit team can help.
Federal Single Audit: Questions and Answers
What is a federal single audit?
The federal single audit is a rigorous examination of the financial statements and programs of nonprofits that received Federal awards. The purpose is to ensure the nonprofit uses its federal awards, such as grants or federal agency contracts, as intended and within federal compliance. It becomes mandatory for any nonprofit organization that spends $750,000 or above in federal funds within a single fiscal year.
What programs are subject to a single audit?
The Office of Management and Budget (OMB) Uniform Guidance provides the specific criteria for determining whether a nonprofit program is subject to a federal single audit. Nonprofits must review the terms and conditions of their federal awards and consult the applicable federal agency’s regulations and guidance.
What are the key objectives of a federal single audit?
Federal single audits are performed to assess compliance, test internal controls, and examine financial statements. Let us review each key objective:
- Assess compliance: The audit report showcases whether the nonprofit followed applicable federal statutes, regulations, and terms and conditions governing the federal award provided.
- Internal controls: The report assesses how effective the internal controls are when managing federal aid to ensure they’re appropriately used and follow program requirements.
- Financial statements: An examination of the financial documents occurs to ensure transparency and accuracy of the records.
Where and when does a nonprofit need to submit the Single Audit Report (SAR)?
Federal Single Audit reports are submitted electronically to the Federal Audit Clearinghouse (FAC). It must be done within 30 days after the independent auditor provides the report or 9 months after the end of the fiscal year for the nonprofit. It is comprised of two parts: data collection form (Form SF-SAC) and the single audit report package that includes the (1) financial statements and schedule of expenditures of federal awards (SEFA), (2) summary schedule of prior audit findings, (3) report from the auditor, and (4) corrective action plan.
How can a nonprofit organization address findings or recommendations identified during the audit?
If the single audit report includes findings that require a corrective plan, nonprofits must address them quickly and effectively before submission to the FAC. Nonprofits need to review and understand the nature of the issues identified and potential consequences and outline the steps to take corrective action. They can seek expert advice or guidance from experts and improve internal controls to avoid potential issues in the future.
Who is qualified to perform single audits?
A third-party independent auditor and Certified Public Accountant (CPA) are qualified to perform single audits for nonprofit organizations, such as our team at Assurance Dimensions. We are knowledgeable about GAAP guidelines, federal statutes, regulations, and terms and conditions for federal awards provided to nonprofits.
If your organization requires a single audit, let us help you. Contact us today to learn more about how we can help with nonprofit audits.